Bill Text: IA SF2285 | 2015-2016 | 86th General Assembly | Introduced
Bill Title: A bill for an act relating to the administration of programs by the economic development authority by creating a renewable chemical production tax credit program, modifying the high quality jobs program, and including effective date and other applicability provisions. (Formerly SSB 3001; see SF 2300.)
Sponsorship: Committee Bill
Status: (Introduced - Dead) 2016-03-03 - Returned to committee. [SF2285 Detail]
Download: Iowa-2015-SF2285-Introduced.html
Senate File 2285 - Introduced SENATE FILE BY COMMITTEE ON ECONOMIC GROWTH (SUCCESSOR TO SSB 3001) A BILL FOR 1 An Act relating to the administration of programs by the 2 economic development authority by creating a renewable 3 chemical production tax credit program, modifying the high 4 quality jobs program, and including effective date and other 5 applicability provisions. 6 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: TLSB 5172SV (3) 86 mm/sc PAG LIN 1 1 DIVISION I 1 2 HIGH QUALITY JOBS PROGRAM 1 3 Section 1. Section 15.119, subsection 2, paragraph a, Code 1 4 2016, is amended to read as follows: 1 5 a. (1) The high qualityjob creationjobs program 1 6 administered pursuant to sections 15.326 through 15.336. 1 7 (2) In allocating tax credits pursuant to this subsection 1 8 for each fiscal year of the fiscal period beginning July 1 9 1, 2016, and ending June 30, 2021, the authority shall not 1 10 allocate more than one hundred five million dollars for 1 11 purposes of this paragraph. This subparagraph (2) is repealed 1 12 July 1, 2021. 1 13 (3) (a) In allocating tax credits pursuant to this 1 14 subsection for the fiscal year beginning July 1, 2021, and 1 15 ending June 30, 2022, the authority shall not allocate more 1 16 than one hundred five million dollars for purposes of this 1 17 paragraph if the aggregate amount of renewable chemical 1 18 production tax credits under section 15.319 that were awarded 1 19 on or after July 1, 2018, but before July 1, 2021, equals or 1 20 exceeds twenty=seven million dollars. 1 21 (b) As soon as practicable after June 30, 2021, the 1 22 authority shall notify the general assembly of the aggregate 1 23 amount of renewable chemical production tax credits awarded 1 24 under section 15.319 on or after July 1, 2018, but before 1 25 July 1, 2021, and whether or not the tax credit allocation 1 26 limitation described in subparagraph division (a) is 1 27 applicable. 1 28 (c) This subparagraph (3) is repealed July 1, 2022. 1 29 DIVISION II 1 30 RENEWABLE CHEMICAL PRODUCTION TAX CREDIT PROGRAM 1 31 Sec. 2. Section 2.48, subsection 3, Code 2016, is amended by 1 32 adding the following new paragraph: 1 33 NEW PARAGRAPH. g. In 2022, the renewable chemical 1 34 production tax credit program available under sections 15.315 1 35 through 15.321. 2 1 Sec. 3. Section 15.119, subsection 2, Code 2016, is amended 2 2 by adding the following new paragraph: 2 3 NEW PARAGRAPH. h. The renewable chemical production tax 2 4 credit program administered pursuant to sections 15.315 through 2 5 15.321. In allocating tax credits pursuant to this subsection, 2 6 the authority shall not allocate more than ten million dollars 2 7 for purposes of this paragraph. 2 8 Sec. 4. NEW SECTION. 15.315 Short title. 2 9 This part shall be known and may be cited as the "Renewable 2 10 Chemical Production Tax Credit Program". 2 11 Sec. 5. NEW SECTION. 15.316 Definitions. 2 12 As used in this part, unless the context otherwise requires: 2 13 1. "Biobased content percentage" means, with respect to any 2 14 renewable chemical, the amount, expressed as a percentage, of 2 15 renewable organic material present as determined by testing 2 16 representative samples using the American society for testing 2 17 and materials standard D6866. 2 18 2. "Biomass feedstock" means sugar, polysaccharide, crude 2 19 glycerin, lignin, fat, grease, or oil derived from a plant or 2 20 animal, or a protein capable of being converted to a building 2 21 block chemical by means of a biological or chemical conversion 2 22 process. 2 23 3. "Building block chemical" means a molecule converted 2 24 from biomass feedstock as a first product or a secondarily 2 25 derived product that can be further refined into a higher=value 2 26 chemical, material, or consumer product. "Building block 2 27 chemical" includes but is not limited to high=purity glycerol, 2 28 oleic acid, lauric acid, methanoic or formic acid, arabonic 2 29 acid, erythonic acid, glyceric acid, glycolic acid, lactic 2 30 acid, 3=hydroxypropionate, propionic acid, malonic acid, 2 31 serine, succinic acid, fumaric acid, malic acid, aspartic 2 32 acid, 3=hydroxybutyrolactone, acetoin, threonine, itaconic 2 33 acid, furfural, levulinic acid, glutamic acid, xylonic acid, 2 34 xylaric acid, xylitol, arabitol, citric acid, aconitic acid, 2 35 5=hydroxymethylfurfural, lysine, gluconic acid, glucaric acid, 3 1 sorbitol, gallic acid, ferulic acid, nonfuel butanol, nonfuel 3 2 ethanol, a polymer or gum that can be produced directly from a 3 3 protein=based biomass feedstock, or such additional molecules 3 4 as may be included by the authority by rule after consultation 3 5 with appropriate experts from Iowa state university, including 3 6 but not limited to the Iowa state university center for 3 7 biorenewable chemicals. 3 8 4. "Crude glycerin" means glycerin with a purity level below 3 9 ninety=five percent. 3 10 5. "Eligible business" means a business meeting the 3 11 requirements of section 15.317. 3 12 6. "Food additive" means a building block chemical that 3 13 is not primarily consumed as food but which, when combined 3 14 with other components, improves the taste, appearance, odor, 3 15 texture, or nutritional content of food. The authority, in its 3 16 discretion, shall determine whether or not a building block 3 17 chemical is primarily consumed as food. 3 18 7. "High=purity glycerol" means glycerol with a purity level 3 19 of ninety=five percent or higher. 3 20 8. "Pre=eligibility production threshold" means, with respect 3 21 to each eligible business, the number of pounds of renewable 3 22 chemicals produced, if any, by an eligible business during the 3 23 calendar year prior to the calendar year in which the business 3 24 first qualified as an eligible business pursuant to section 3 25 15.317. 3 26 9. "Program" means the renewable chemical production tax 3 27 credit program administered pursuant to this part. 3 28 10. "Renewable chemical" means a building block chemical 3 29 with a biobased content percentage of at least fifty percent. 3 30 "Renewable chemical" does not include a chemical sold or used 3 31 for the production of food, feed, or fuel. "Renewable chemical" 3 32 includes cellulosic ethanol, starch ethanol, or other ethanol 3 33 derived from biomass feedstock, fatty acid methyl esters, 3 34 or butanol, but only to the extent that such molecules are 3 35 produced and sold for uses other than food, feed, or fuel. 4 1 "Renewable chemical" also includes a building block chemical 4 2 that can be a food additive as long as the building block 4 3 chemical is not primarily consumed as food and is also sold 4 4 for uses other than food. "Renewable chemical" also includes 4 5 supplements, vitamins, nutraceuticals, and pharmaceuticals, but 4 6 only to the extent that such molecules do not provide caloric 4 7 value so as to be considered sustenance as food or feed. 4 8 11. "Sugar" means the organic compound glucose, fructose, 4 9 xylose, arabinose, lactose, sucrose, starch, cellulose, or 4 10 hemicellulose. 4 11 Sec. 6. NEW SECTION. 15.317 Eligibility requirements. 4 12 To be eligible to receive the renewable chemical production 4 13 tax credit pursuant to the program, a business shall meet all 4 14 of the following requirements: 4 15 1. The business is physically located in this state. 4 16 2. The business is operated for profit and under single 4 17 management. 4 18 3. The business is not an entity providing professional 4 19 services, health care services, or medical treatments or an 4 20 entity engaged primarily in retail operations. 4 21 4. The business organized, expanded, or located in the state 4 22 on or after the effective date of this division of this Act. 4 23 5. The business shall not be relocating or reducing 4 24 operations as described in section 15.329, subsection 1, 4 25 paragraph "b", and as determined under the discretion of the 4 26 authority. 4 27 6. The business is in compliance with all agreements entered 4 28 into under this program or other programs administered by the 4 29 authority. 4 30 Sec. 7. NEW SECTION. 15.318 Eligible business application 4 31 and agreement ==== maximum tax credits. 4 32 1. Application. 4 33 a. An eligible business that produces a renewable chemical 4 34 in this state from biomass feedstock during a calendar year may 4 35 apply to the authority for the renewable chemical production 5 1 tax credit provided in section 15.319. 5 2 b. The application shall be made to the authority in the 5 3 manner prescribed by the authority. 5 4 c. The application shall be made during the calendar year 5 5 following the calendar year in which the renewable chemicals 5 6 are produced. 5 7 d. The authority may accept applications on a continuous 5 8 basis or may establish, by rule, an annual application 5 9 deadline. 5 10 e. The application shall include all of the following 5 11 information: 5 12 (1) The amount of renewable chemicals produced in the state 5 13 from biomass feedstock by the eligible business during the 5 14 calendar year, measured in pounds. 5 15 (2) Any other information reasonably required by the 5 16 authority in order to establish and verify eligibility under 5 17 the program. 5 18 2. Agreement and fees. 5 19 a. Before being issued a tax credit under section 15.319, 5 20 an eligible business shall enter into an agreement with the 5 21 authority for the successful completion of all requirements of 5 22 the program. As part of the agreement, the eligible business 5 23 shall agree to collect and provide any information reasonably 5 24 required by the authority in order to allow the board to 5 25 fulfill its reporting obligation under section 15.320. 5 26 b. The compliance cost fees authorized in section 15.330, 5 27 subsection 12, shall apply to all agreements entered into 5 28 under this program and shall be collected by the authority in 5 29 the same manner and to the same extent as described in that 5 30 subsection. 5 31 c. An eligible business shall fulfill all the requirements 5 32 of the program and the agreement before receiving a tax credit 5 33 or entering into a subsequent agreement under this section. 5 34 The authority may decline to enter into a subsequent agreement 5 35 under this section or issue a tax credit if an agreement is not 6 1 successfully fulfilled. 6 2 d. Upon establishing that all requirements of the program 6 3 and the agreement have been fulfilled, the authority shall 6 4 issue a tax credit and related tax credit certificate to the 6 5 eligible business stating the amount of renewable chemical 6 6 production tax credit the eligible business may claim. 6 7 3. Maximum tax credit amount. 6 8 a. The maximum amount of tax credit that may be issued under 6 9 section 15.319 to an eligible business for the production of 6 10 renewable chemicals in a calendar year shall not exceed the 6 11 following: 6 12 (1) In the case of an eligible business that has been in 6 13 operation in the state for five years or less at the time of 6 14 application, one million dollars. 6 15 (2) In the case of an eligible business that has been in 6 16 operation in the state for more than five years at the time of 6 17 application, five hundred thousand dollars. 6 18 b. An eligible business shall not receive a tax credit for 6 19 renewable chemicals produced before the date the business first 6 20 qualified as an eligible business pursuant to section 15.317. 6 21 c. An eligible business shall only receive a tax credit for 6 22 renewable chemicals produced in a calendar year to the extent 6 23 such production exceeds the eligible business's pre=eligibility 6 24 production threshold. 6 25 d. An eligible business shall not receive more than five tax 6 26 credits under the program. 6 27 e. The authority shall issue tax credits under the program 6 28 on a first=come, first=served basis until the maximum amount of 6 29 tax credits allocated pursuant to section 15.119, subsection 6 30 2, paragraph "h", is reached. The authority shall maintain 6 31 a list of successful applicants under the program, so that 6 32 if the maximum aggregate amount of tax credits is reached in 6 33 a given fiscal year, eligible businesses that successfully 6 34 applied but for which tax credits were not issued shall be 6 35 placed on a wait list in the order the eligible businesses 7 1 applied and shall be given priority for receiving tax credits 7 2 in succeeding fiscal years. Placement on a wait list pursuant 7 3 to this paragraph shall not constitute a promise binding the 7 4 state. The availability of a tax credit and issuance of a tax 7 5 credit certificate pursuant to this subsection in a future 7 6 fiscal year is contingent upon the availability of tax credits 7 7 in that particular fiscal year. 7 8 4. Termination and repayment. The failure by an eligible 7 9 business in fulfilling any requirement of the program or any of 7 10 the terms and obligations of an agreement entered into pursuant 7 11 to this section may result in the reduction, termination, 7 12 or recision of the tax credits under section 15.319 and may 7 13 subject the eligible business to the repayment or recapture of 7 14 tax credits claimed. The repayment or recapture of tax credits 7 15 pursuant to this subsection shall be accomplished in the same 7 16 manner as provided in section 15.330, subsection 2. 7 17 5. Confidentiality. 7 18 a. Except as provided in paragraph "b", any information 7 19 or record in the possession of the authority with respect to 7 20 the program shall be presumed by the authority to be a trade 7 21 secret protected under chapter 550 or common law and shall be 7 22 kept confidential by the authority unless otherwise ordered by 7 23 a court. 7 24 b. The identity of a tax credit recipient and the amount 7 25 of the tax credit shall be considered public information under 7 26 chapter 22. 7 27 Sec. 8. NEW SECTION. 15.319 Renewable chemical production 7 28 tax credit. 7 29 1. An eligible business that has entered into an agreement 7 30 pursuant to section 15.318 may claim a tax credit in an amount 7 31 equal to the product of five cents multiplied by the number 7 32 of pounds of renewable chemicals produced in this state from 7 33 biomass feedstock by the eligible business during the calendar 7 34 year in excess of the eligible business's pre=eligibility 7 35 production threshold. However, an eligible business shall 8 1 not receive a tax credit for the production of a secondarily 8 2 derived building block chemical if that chemical is also the 8 3 subject of a credit at the time of production as a first 8 4 product. The renewable chemical production tax credit shall 8 5 not be available for any renewable chemical produced before the 8 6 2017 calendar year or after the 2026 calendar year. 8 7 2. The tax credit shall be allowed against taxes imposed 8 8 under chapter 422, division II or III. 8 9 3. The tax credit shall be claimed for the tax year during 8 10 which the eligible business was issued the tax credit. 8 11 4. An individual may claim a tax credit under this section 8 12 of a partnership, limited liability company, S corporation, 8 13 cooperative organized under chapter 501 and filing as a 8 14 partnership for federal tax purposes, estate, or trust electing 8 15 to have income taxed directly to the individual. The amount 8 16 claimed by the individual shall be based upon the pro rata 8 17 share of the individual's earnings from the partnership, 8 18 limited liability company, S corporation, cooperative, estate, 8 19 or trust. 8 20 5. Any tax credit in excess of the tax liability is 8 21 refundable. In lieu of claiming a refund, the taxpayer 8 22 may elect to have the overpayment shown on the taxpayer's 8 23 final, completed return credited to the tax liability for the 8 24 following tax year. 8 25 6. a. To claim a tax credit under this section, a taxpayer 8 26 shall include one or more tax credit certificates with the 8 27 taxpayer's tax return. 8 28 b. The tax credit certificate shall contain the taxpayer's 8 29 name, address, tax identification number, the amount of the 8 30 credit, the name of the eligible business, and any other 8 31 information required by the department of revenue. 8 32 c. The tax credit certificate, unless rescinded by the 8 33 authority, shall be accepted by the department of revenue as 8 34 payment for taxes imposed pursuant to chapter 422, divisions II 8 35 and III, subject to any conditions or restrictions placed by 9 1 the authority upon the face of the tax credit certificate and 9 2 subject to the limitations of the program. 9 3 d. Tax credit certificates issued pursuant to this section 9 4 shall not be transferred to any other person. 9 5 Sec. 9. NEW SECTION. 15.320 Reports to general assembly. 9 6 By January 31, 2019, and by the same date each year 9 7 thereafter, the board, in cooperation with the department of 9 8 revenue, shall submit to the general assembly and the governor 9 9 a report describing the activities of the program for the most 9 10 recent calendar year for which the tax credit application 9 11 period has ended pursuant to section 15.318, subsection 1, 9 12 paragraph "c". 9 13 Sec. 10. NEW SECTION. 15.321 Rules. 9 14 The authority and the department of revenue shall each adopt 9 15 rules as necessary for the implementation and administration 9 16 of this part. 9 17 Sec. 11. NEW SECTION. 422.10A Renewable chemical production 9 18 tax credit. 9 19 The taxes imposed under this division, less the credits 9 20 allowed under section 422.12, shall be reduced by a renewable 9 21 chemical production tax credit allowed under section 15.319. 9 22 Sec. 12. Section 422.33, Code 2016, is amended by adding the 9 23 following new subsection: 9 24 NEW SUBSECTION. 22. The taxes imposed under this division 9 25 shall be reduced by a renewable chemical production tax credit 9 26 allowed under section 15.319. 9 27 Sec. 13. TAX CREDIT CLAIMS. Renewable chemical production 9 28 tax credits issued pursuant to the renewable chemical 9 29 production tax credit program enacted in this division of this 9 30 Act shall not be issued by the economic development authority 9 31 prior to July 1, 2018, and shall not be claimed by a taxpayer 9 32 prior to September 1, 2018. 9 33 Sec. 14. EFFECTIVE UPON ENACTMENT. This division of this 9 34 Act, being deemed of immediate importance, takes effect upon 9 35 enactment. 10 1 Sec. 15. APPLICABILITY. This division of this Act applies 10 2 to renewable chemicals produced in the state from biomass 10 3 feedstock on or after January 1, 2017. 10 4 EXPLANATION 10 5 The inclusion of this explanation does not constitute agreement with 10 6 the explanation's substance by the members of the general assembly. 10 7 This bill relates to the administration of programs by 10 8 the economic development authority (EDA) by modifying the 10 9 high quality jobs program and creating a renewable chemical 10 10 production tax credit program. 10 11 DIVISION I ==== HIGH QUALITY JOBS PROGRAM. Division I limits 10 12 for a period of five or six fiscal years the amount of tax 10 13 credits that may be allocated to the high quality jobs program, 10 14 which under current law is subject to EDA's maximum aggregate 10 15 tax credit cap of $170 million per fiscal year in Code section 10 16 15.119. The bill provides that for each of the five fiscal 10 17 years beginning on July 1, 2016, and ending on June 30, 2021, 10 18 the authority shall not allocate more than $105 million of 10 19 that $170 million cap to the high quality jobs program. This 10 20 provision is repealed July 1, 2021. 10 21 If the aggregate amount of renewable chemical production 10 22 tax credits awarded by EDA for the fiscal period beginning on 10 23 July 1, 2018, and ending June 30, 2021, equals or exceeds $27 10 24 million, then an additional year of high quality jobs program 10 25 tax credit allocation limitation occurs and for the fiscal 10 26 year beginning July 1, 2021, and ending June 30, 2022, the 10 27 authority shall not allocate more than $105 million of its $170 10 28 million cap to the high quality jobs program. This provision 10 29 is repealed July 1, 2022. 10 30 DIVISION II ==== RENEWABLE CHEMICAL PRODUCTION TAX CREDIT. 10 31 Division II creates a renewable chemical production tax credit 10 32 program (program) that will be administered by the EDA and that 10 33 will provide tax credits to eligible businesses that produce 10 34 renewable chemicals in Iowa from biomass feedstock. "Renewable 10 35 chemical", "biomass feedstock", and other related terms are 11 1 defined in the division. 11 2 In order to qualify for the tax credit, a business must 11 3 meet several requirements. First, the business must be 11 4 physically located in Iowa and operated for profit under 11 5 single management. Second, the business must not be an 11 6 entity providing professional services, health care services, 11 7 or medical treatments, or be engaged primarily in retail 11 8 operations. Third, the business must have organized, expanded, 11 9 or located in Iowa on or after the effective date of the 11 10 division. Fourth, the business must not be, in the discretion 11 11 of the EDA, ineligible under certain provisions relating to the 11 12 relocation or reduction of business operations within Iowa. 11 13 Fifth, the business must be in compliance with all agreements 11 14 entered into under the program or other programs administered 11 15 by the EDA. 11 16 An eligible business seeking a tax credit is required to 11 17 submit an application to the EDA containing various information 11 18 during the calendar year following the calendar year in which 11 19 the renewable chemicals are produced. The EDA may accept 11 20 applications on a continuous basis or may establish an annual 11 21 application deadline. 11 22 Before being issued a tax credit, an eligible business 11 23 is required to enter into an agreement with the EDA for the 11 24 successful completion of all requirements of the program. The 11 25 EDA is authorized to impose two compliance cost fees under the 11 26 program. The first fee equals $500 per agreement. The second 11 27 fee equals 0.5 percent of the value of the tax credit claimed 11 28 pursuant to the agreement if the agreement has an aggregate tax 11 29 credit value of $100,000 or greater. 11 30 An eligible business that fails to comply with the 11 31 requirements of the program or the terms of an agreement with 11 32 the EDA may have its tax credits reduced, terminated, or 11 33 rescinded, and may be subject to the repayment or recapture of 11 34 claimed tax credits. 11 35 The tax credit equals the product of $.05 multiplied by the 12 1 number of pounds of renewable chemicals produced in Iowa from 12 2 biomass feedstock by the eligible business during the calendar 12 3 year in excess of the eligible business's pre=eligibility 12 4 production threshold. "Pre=eligibility production threshold" 12 5 is defined in the bill. Renewable chemicals produced by 12 6 an eligible business either prior to calendar year 2017 or 12 7 prior to the date the business first qualifies as an eligible 12 8 business, or after calendar year 2026, shall not qualify for 12 9 the tax credit. 12 10 The tax credit shall be claimed for the tax year during which 12 11 the eligible business was issued the tax credit. However, tax 12 12 credits shall not be issued by EDA prior to July 1, 2018, or 12 13 claimed by the taxpayer prior to September 1, 2018. The tax 12 14 credit may be claimed against the individual income tax and the 12 15 corporate income tax. The credit is refundable or may, at the 12 16 election of the taxpayer, be carried forward for up to one tax 12 17 year. The tax credit shall not be transferred to any person. 12 18 The division provides that the program is subject to EDA's 12 19 maximum aggregate tax credit cap of $170 million per fiscal 12 20 year in Code section 15.119, and not more than $10 million 12 21 per fiscal year may be issued by the EDA under the program. 12 22 In addition, the maximum amount of tax credit that may be 12 23 issued to an eligible business for the production of renewable 12 24 chemicals in any one calendar year shall not exceed $1 million 12 25 or $500,000, depending on whether the eligible business has 12 26 been operating in Iowa at the time of application for five 12 27 or fewer years, or more than five years, respectively. An 12 28 eligible business shall not receive more than five tax credits 12 29 under the program. The EDA is required to issue tax credits 12 30 on a first=come, first=served basis until the maximum amount 12 31 of $10 million per fiscal year is reached. If the amount of 12 32 tax credits exceeds this amount in a fiscal year, the EDA 12 33 is required to establish a wait list and give priority in 12 34 subsequent years to the eligible businesses on the wait list. 12 35 The division provides for the confidentiality of certain 13 1 information under the program. The identity of a tax credit 13 2 recipient and the amount of the tax credit shall be considered 13 3 public information under Code chapter 22 (examination of public 13 4 records), but any other information or record in the possession 13 5 of the EDA with respect to the program shall be presumed by 13 6 the EDA to be a trade secret protected under Code chapter 550 13 7 or common law and shall be kept confidential by the EDA unless 13 8 otherwise ordered by a court. 13 9 The division requires EDA to submit to the general assembly 13 10 and the governor an annual report describing the activities 13 11 of the program for each calendar year. The report for the 13 12 first calendar year the tax credit is available under the 13 13 program (2017) is due by January 31, 2019, and reports covering 13 14 subsequent calendar years are due by the same date each year 13 15 thereafter. Eligible businesses are required, as part of their 13 16 agreement with EDA, to collect and provide any information 13 17 reasonably required by EDA in order to fulfill this reporting 13 18 requirement. 13 19 The division adds the program to the list of tax expenditures 13 20 to be reviewed by the legislative tax expenditure committee in 13 21 calendar year 2022. 13 22 The division takes effect upon enactment and applies to 13 23 renewable chemicals produced in Iowa from biomass feedstock on 13 24 or after January 1, 2017. LSB 5172SV (3) 86 mm/sc
